Starting and continuing to save for retirement is difficult for many individuals for various reasons—such as present bias—threatening financial well-being in old age. Pension income security is also at risk when individuals take out substantial lump-sums of saved pension capital at retirement or even before—so-called early withdrawals.

Few pension systems allow for early lump-sum withdrawals but when they do, individuals seem to make use substantial use of them.

With the Netherlands moving toward introducing a (at retirement) 10% lump-sum option it is important to learn about why individuals and which individuals will respond to the option to inform:

  • Pension providers:
    • To better understand what should be proper choice guidance that works for the benefit of (which groups of) participants and
    • To get a projection about the expected prevalence and size of withdrawals to assess the impact on the fraction of the asset base potentially liquidated.
  • Policymakers:
    • To guide regulation regarding lump-sum options.